Nifty Update

Let us take a step back and look at things from a longer timeframe based on Elliott wave analysis. The 1st wave lasted from 2003 to 2008 January which took the Nifty from 1000 to 6350. The 2nd corrective wave bottomed in October 2008 around 2250 levels. We are now part of a larger 3rd wave which should take the Nifty to 14000 in the next 4-5 years.

We have seen a pattern of higher tops and higher bottoms from March 2009
As long as we don’t break 4667 which we hit on 8 February 2010 this bull move is intact. On the upside when we break 5398 which is the recent high on 7 April 2010, this move is further confirmed and we will hit fresh highs

The 200 DMA is at 4987. If the Nifty closes below this level for 2-3 days in a row then it is a critical point as if this is broken lot of Long only players like pension funds and trusts etc will exit which could easily give a 300-400 point drop.

For the shorter timeframe, traders can go short with a Stop Loss of 5200